Author: PPD Team Date: 17/06/2025

On June 16, 2025, the Ministry of Power issued amendments to its 2021 guidelines on the Model Contract Provision for “Dispute Avoidance Mechanism” in hydro power projects. This mechanism involves appointing Independent Engineers (IEs) to resolve disagreements between Central Public Sector Enterprises (CPSEs) and contractors at an early stage.

The updated provisions revise payment terms. A retainer fee of Rs 100,000 per month has been fixed for FY 2025–26, with a 10% annual increment. IEs may work with up to two CPSEs and handle two contracts per CPSE. Site visit fees remain Rs 20,000 per day, limited to 10 days a month.

The revised rules introduce an age cap: candidates can apply up to 65 years of age and serve until 70. The existing panel of 19 IEs, established in 2021, will be withdrawn after the new empanelment is finalised. IEs already engaged will continue as per earlier terms.

IEs are expected to stay involved throughout the project. They must visit sites at least once every two months and conduct additional visits when necessary. Responsibilities include reviewing technical documentation, resolving early disagreements, and issuing written recommendations. As per the standard operating procedure, any resolution must be issued within 30 days, with a provision for limited extension in special cases.

This Dispute Avoidance Mechanism will now replace dispute boards in all new hydro contracts. Existing contracts may adopt it with mutual agreement.

Engineer wearing a hard hat and safety vest examines construction plans in front of a hydroelectric dam with water flowing through spillways.

The Ministry has also issued an Expression of Interest (EoI) for empanelment of Independent Engineers. Eligible applicants include retired professionals with hydro power experience in roles such as CMD, MD, Chief Engineer in CEA or CWC, or equivalent.

Candidates must demonstrate domain expertise in fields like engineering design, civil, hydro-mechanical, electro-mechanical, or quality assurance. They will be required to make bimonthly site visits lasting at least five days, maintain detailed diaries, and examine technical and contractual documentation.

The engagement will run for up to five years or the contract duration, whichever is shorter. All payments—retainer, site visits, travel, and meeting costs—will be shared equally by the CPSE and contractor, though initially paid by the CPSE.

Access the amended model contract provisions here

Access the full Expression of Interest document here.

Featured photograph is for representation only.

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